Capitalism as Our Greatest Hope

What I'm hoping is that we as Americans, and people in other countries, too, can think more clearly about capitalism as the engine of growth that lifts people out of poverty.

I think in the long run our greatest hope is capitalism. That might sound like a strange thing to many people now because America is engaged in a debate on the ethical nature of capitalism. What I'm hoping is that we as Americans, and people in other countries, too, can think more clearly about capitalism as the engine of growth that lifts people out of poverty. It can only work when you have efficient markets, and you can only have efficient markets when you have government tamping down on monopoly, on those who exploit public goods, and on those who pass externalities on to others.

But in the long run capitalism is triumphing all around the world. That's a very good thing, because countries that turned away from it mired their people in poverty, and were prone to war and exploitation and cruelty. So in the long run I'm hopeful that the Third World is developing. As people get richer, they then get rights. They then get more accountability from their government.

I think that ultimately, if we're going to reach our potential, if we're going to live in decent civilized societies that don't go to war, it's going to be because we have crossed the demographic transition and the political transition, where the whole world has effective political institutions, the whole world has democratic capitalism, and not crony capitalism. This is a problem in each nation. I hope that each nation can get it right. Nations that do it well will rise and become the leading nations of this century. Nations that do it wrong, like Russia, will stay mired in corruption and inefficiency.